Johnson: Recovery will gain steam, state to outpace nation

Hugh Johnson, who heads the eponymous Albany-based investment consulting firm, painted a brighter picture for the state’s and nation’s economy during a talk this morning at the Albany-Colonie Regional Chamber of Commerce. But he cautioned that the housing market would continue to be a drag on the recovery into 2012.

“The outlook from 30,000 feet looks extremely bright, or very, very positive,” he told a packed ballroom at the Albany Marriott Hotel. “By the fourth quarter of 2012, the national economy will have recovered 6.4 million of the 8.3 million jobs lost during this extraordinarily difficult and unusual (economic) crisis.”

Investors, he said, are moving away from the safer sectors of the economy such as health care and into growth stocks in such areas as basic materials.

Stock markets have rebounded.

“The message of the financial markets … is that investors are clearly willing to take more risks,” he said.

Meanwhile, the Federal Reserve has been “accommodative,” and “we’re starting to see some improvement in bank lending. The money supply is expanding,” he added.

While New York state’s economy has been weaker than the national economy, Johnson expects that to change.

This year, the U.S. economy is expanding by 1.1 percent as the state contracted by 1.4 percent. But by 2012, he said, the U.S. economy will grow by 3.0 percent, while New York’s will grow by 3.9 percent, Johnson said.

“The New York state economy will have recoved 297,000 of the 343,000 jobs lost during the financial crisis of 2008 and 2009,” he said.

Johnson also said the recovery isn’t yet far enough along to start cutting government deficits.

“The idea that we should move aggressively on reducing deficits is a mistake,” he said. “(Federal Reserve Chairman Ben) Bernanke understands you need to add liquidity… It’s better to err on the side of too much accommodation.”

And he said that while the recovery is expected to strengthen at least through 2011, investors should remain “on their toes,” drawing parallels with a century-old recovery that saw the stock market take an abrupt dip.

“It’s going to be a good year for the stock market, a good year for the economy,” he said. “But stay tuned.”

ALBANY — Unemployment in the Capital Region rose to 7 percent of the work force from 6.7 percent a year earlier, even as that work force continued to shrink, the state Labor Department reported Thursday.

Despite a gain of 2,100 private-sector jobs, public employment tumbled by 5,100 jobs, 3,800 of them at the state level. Those job cuts are expected to continue.

“The public numbers are going to continue to drop,” said state labor markets analyst James Ross.

Ross said the decline in the overall work force — at 452,300, it’s at a six-year low — may be partly due to baby boomers retiring. Many had delayed retirement at the start of the recession as the stock market tumble decimated their retirement accounts.

Now, with the markets recovering, Ross said that generation is once again taking retirement.

Boosting their numbers are public workers who are being offered retirement incentives.

In the private sector category, retail trade saw a loss of 3,100 jobs from a year earlier, a 6.5 percent decline.

“Retail trade was still very weak,” Ross said. “If jobs are down, people are going to shop less.”

Professional and business services, a sector that includes technology jobs, was up by 2,400 jobs, to 54,700, over the past year.

In the Capital Region, Saratoga County had the lowest jobless rate, at 6.5 percent of the work force, while Schoharie County had the highest, at 8.3 percent. Albany County posted a rate of 6.9 percent, while Rensselaer County’s unemployment rate was 7.3 percent and Schenectady County’s 7.5 percent.

To the north, 8.8 percent of Warren County’s work force was unemployed, while the rate was 7.3 percent in Washington County.